Scaling the issue of providing better advice

by William Cain

As the wealth management industry focuses on providing more personal and sounder advice, new solutions are being trialled and implemented to improve the quality of service offered to clients.

While industry dynamics increase the emphasis placed on providing this more personal service, it comes at a time when banks have been rapidly increasing both the levels of assets under management and their number of customers – creating an obvious conflict.

Biggest challenge

Banks with the greatest scale are posed the biggest challenge by this issue, and HSBC– the biggest of them all in Europe – has acknowledged this in part, rolling out a huge project it has termed One HSBC.

The core system, which has been developed predominantly in-house, serves all of the businesses across the bank, including its private bank.

Implementation costs were $600 million in 2007, $1 billion in 2008 and will be $1.2 to $1.3 billion in 2009. The project has been running since 2006 and, although total costs were not given, HSBC chief information officer Ken Harvey said the project has recently turned to a profit.

The new technology has allowed the bank to launch a customer proposition called Me to Me, which enables Premier customers to transfer money in real-time between accounts in different countries without fees.

The project is also set to create benefits on the advisory side. The bank is experimenting with video conferencing technology with technology vendor Nortel, which would allow advisers to speak to and see clients through mobile phones and laptops.

While this technology is expensive for a huge bank like HSBC to implement, it is potentially easier for the smaller private banks and independent financial advisers to launch because they have fewer customers and the technology investment is not so onerous.

A report from Odyssey Financial Technologies, a service provider to the wealth management industry, highlights how current market conditions have made investor protection paramount, and advice “more important than ever”.

Odyssey recently launched its Wealth Manager to tap into this trend, which allows its bank clients to make broad investment portfolio decisions and then easily tailor them to individual customer needs.

Risk management is key

The report adds the strengthening of risk management will also be a key factor.

Didier Pitton, product managing director at Odyssey, said: “Driven by competition, compliance and the increasing sophistication of investment products, financial institutions have to implement strict rules to protect private investors and ensure they understand and manage their portfolio’s risk.”

There is also expected to be an increase in the number of banks looking at outsourcing their CRM systems in coming months as they look to reduce costs, streamline their systems and focus on improving their advisory capacity.

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